。
He plays the piano well.
Literal
He [topic-は] piano [object-を] well plays.
上手に is the adverbial form of the na-adjective 上手 ('skillful'). Na-adjectives form adverbs by adding に (compare i-adjectives, which use the く form). Note that ピアノを弾く uses the verb 弾く specifically for playing stringed and keyboard instruments — different from 吹く (wind instruments) or 叩く (percussion).